The five phases traders will experience before becoming profitable are the stages we all must go through. Confusion, learning, evaluation, mental stability and finally maturation are typically what a trader is expected to fight through. Well, to be honest, most people’s “trading career” ends on stage one. In fact, I think at least 80 to 90% of traders get stuck in this first phase for far too long and make no further progression as a result.
Taking The First Step is the Hardest of All
I consider those who make it into phase 2 very lucky because at least they get to know what is expected in order to make it as a trader. From here, most people can get to phase 3 with a good education but after that, it’s up to the individual to create a trader’s mentality. Unfortunately, these stages are not simple “Do and Do Not Tips for Newbie Traders” – these are actual stages you will have to cross whether you like it or not but it’s important you know about them! Why? Because it will increase your chances of making it through each phase to the final stage: a mature and profitable trader!
Phase 1 – Confusion: The Conscious and Subconscious Search for a Shortcut
Phase 1 is confusion, standard for everyone who first encounters the world of Binary Options or trading in general. It is so much you don’t know yet and the many things you already know might be completely wrong. You may be driven by exaggerated advertisement and crooks on social media promoting their “make easy money schemes”. Your approach to trading is totally wrong and you don’t even know it yet. All you are thinking about is “how fast can I turn this 100 bucks into my first 10K”. You are both consciously and subconsciously looking for shortcuts that lead to quick and effortless money. How recently where you looking for that “best binary options strategy”, “best expiry selection” and “best indicator”? Bottom line is, you are not looking to get educated, you want to be spoon-fed and if you don’t do your due diligence you will end up being spoon-fed by the wrong people. The solution to get out of this rat race is to start your trading education.
Phase 2 – Learning: The Need for Knowledge
If you made it here, you have realized that the traders who are actually earning are not earning from easy money schemes but rather because they are experienced traders who’ve taken time to learn to trade. In this phase, you know why someone is profitable; because they have the right training, the right skills, and mindset. In this stage, you will be asking questions such as “how do I draw support and resistance lines”, “how do I trade this type of pattern or market situation” and “what exactly does this indicator do?” instead of making silly demands like “give me the best indicator in the world so I can make 1000 daily” – you see the difference right? If you do, congratulations you are one of the few who made it to phase 2, welcome!
Phase 3 – Evaluation: Time to put your Trading Skills to Test
Sooner or later just about every trader moves forward from phase 2. This step comes naturally when you realize that the trading techniques you have learned are working out good on your demo account. You look back in your trading diary and realize how much you have improved! “Oh, those first posts in which I was asking for Holy Grail indicators and strategies”… “Oh, all those times I chose a strategy and tried it for 2 days before ditching it for another…” and “why did I even try live trading during that time when I obviously didn’t know how to trade…”
Basically, phase 3 is your moment of epiphany because you have figured out what works for you. You know how to trade with a high success rate, you understand money management, have certain rules to follow and your own favorite and preferred assets, broker, trading technique and trading hours. You know you have got the skills but it’s time for evaluation. You must leave the safe zone of demo trading with its cons and pros and put your money where your mouth is. the next step is obvious, it’s time to trade with real cash. After all, you can’t make any money unless you trade live!
Phase 4 – Mental Stability: The Enemy in the Mirror
If you reach Phase 4 your trading technique works well and you have a high potential to make good money. You’ve begun to learn to make it through periods with high success rates is easy but experiencing losing periods is so difficult. All too often a losing streak crushes one’s morale and the will to continue. “I turned a few bucks into several thousand but lost it all in one day – Why?”
At this stage, you will be facing a new and very strong enemy. No, it’s not some scammer online, it’s not your account manager and neither is it a bad strategy. Then who is this new enemy? It’s simple, look in the mirror! Your new enemy is your own mind. Your fear and greed and other psychological traps. This is a phase you have to endure. There is no easy solution to counter this issue. You must learn to accept losses as easily as you accept your wins. I am going to be honest, this is the hardest stage of them all. Many talented traders with great potential get completely crushed here. Which is sad if you think about how much they had to fight to even reach this stage and how close they are to the final stage which is becoming profitable traders. For additional read: here are the secret behind binary options psychology.
Phase 5 – Maturation: Reaching a Profitable State
Maturation is the final phase of your journey towards becoming a real trader. If you make it all the way here you are a confident trader who knows that in the long run, he will make money because you have proved it is possible to time and time again. Your mind is at ease because losing a few trades here and there or even an entire bad month won’t stress you enough to make you lose control and blow your account. If you made it here, you are a cold and methodical trader. Your emotions are locked up, your money management is routine and trading does no longer give you an adrenaline kick. Yes, you no longer get a kick from trading. It’s just plain boring chart reading… No one and nothing can stress you.
Your Journey From a Confused Newbie to a Mature Trader Begins Here!
Your journey from a confused newbie to a mature trader begins here in the CommuniTraders forum. It’s the best place to get in touch with people from the various phases mentioned above. Join us there to see how other confused beginners managed to drag themselves from phase 1 to phase 5 and kick-start your education.